Business January 2, 2023
Meta Platforms Inc. Sheds More Than 60% in Value Amid Declining Metaverse Market
Meta Platforms Inc., the parent company behind Facebook, Instagram, Messenger, WhatsApp, Meta Quest, Workplace, Mapillary, and Horizon Worlds lost more than 60% of its valuation in 2022, TradingView data showed.
The plunge in market valuation has reduced METAs capitalization by over $500 billion from approximately $936 billion on Jan. 1, 2022, to around $392 billion on Dec. 30, 2022. Much of the decline was attributed to the company’s metaverse project by Reality Labs which saw $9.4 billion in losses from January to September 2022.
Also read: EU Commission Warns Meta Over Facebook Marketplace Antitrust Breach
Meta Platforms was named along with Tencent, ZQGame, Nvidi, miHoYo, Lilith, NetEase, ByteDance, Epic Games, Unity, Microsoft, and Roblox as the key players that will contribute to the growth of the metaverse market to around $825 billion by 2030 at a compound annual growth rate of 39.1%.
Seeing a significant tumble in META stock is a cause for concern since the company’s applications play an essential role in the mobile and desktop metaverse (metaverse market by product type).
Aside from that, Meta Platform’s applications are integral in the gaming, social, conference, content creation, and online shopping (metaverse market by applications), and are used worldwide from the United States and Canada in North America to the Middle East, Africa, and Latin America.
Obsession has caused harm
Many stakeholders have credited the declining numbers of Meta to putting too much focus on emerging sectors. Among them is Art Shaikh, the founder and CEO of Circleit who told MetaNews that, “the obsession with the (metaverse) project has done tremendous harm to the brand.”
Despite the negatives, Meta has made some positive announcements in the last 18 months. In October 2021 when its market cap was above $1 trillion, Facebook announced that it will be hiring 10,000 workers in the European Union to work on its Metaverse.
In May 2022, Meta allowed a small number of collectors and creators to share their digital collectibles on Instagram.
This signalled the company’s embrace of non-fungible tokens (NFTs) – another sector made possible by blockchain technology which has generated more than $40 billion in all-time sales.
Three months after zooming into digital collectibles, the company announced in August that it supports wallet connections with Coinbase Wallet, Rainbow Wallet, MetaMask, and Trust Wallet.
With these wallets, Instagram users can post popular NFTs minted on the Flow blockchain by Dapper Labs, the development team behind NFT projects such as CryptoKitties, UFC Strike, NBA Top Shots, and NFL ALL DAY.
Towards the end of the month, Meta enabled owners of NFTs to share their digital art on Facebook in addition to Instagram.
NFTs on Instagram
In November, the company announced that creators of NFTs will soon be able to make their own digital art using upgraded features on Instagram where collectibles could be sold to fans on the platform.
Since NFTs cannot be created without blockchain technologies, Meta partnered with Polygon, Solana, and Phantom Wallet to facilitate this process.
META is not the only metaverse stock that was hit hard by the bearish market of 2022. Coinbase Global Inc. (COIN) also lost 86% of its market value throughout 2022. COIN opened on Jan. 3, 2022, at $256.27. Coinbase launched its NFT marketplace to the public in May.
Source: TradingView
Gaming is an essential part of the Metaverse and Roblox is a key player in the development of this growing sector.
Unfortunately, RBLX, the stock of Roblox, a game creation and online game platform shed 72% of its market value in 2022 from $101.91 on its opening day to $28.46 on the day of its close.
The Ethereum-based marketplace disappointed and could not see the same amount of revenue as other platforms such as OpenSea, Rarible, Magic Eden, and X2Y2 in the last seven months of the year. After reaching the year’s peak of $261.63 on its opening day in 2022, COIN closed the year on Dec. 30 with a price of $35.39.
AI
Baidu Is Rolling Out a $145M Venture Capital AI Fund
Chinese tech giant Baidu is setting up a venture capital fund of $145 million or 1 billion yuan to back AI-focused startups. Baidu co-founder and CEO Robin Li announced the launch of the fund at a JP Morgan summit in China this week.
The move could signal China’s push towards self-reliance in the cut-throat generative AI sector. The fund will support the development and innovation of AI-based content creation, such as chatbots, video and audio synthesis, and natural language processing.
The fund is targeting early-stage AI applications, an area which Chinese generative AI startups have so far struggled to reach widespread adoption.
Also read: AI Code of Conduct Coming ‘Within Weeks’ Says US and Europe
Tailing the US’s OpenAI
OpenAI recently created an investment fund valued at more than $175 million, according to a Securities and Exchange Commission filing. the company has been investing in startups, with its OpenAI Startup Fund to back companies “pushing the boundaries of how powerful AI can positively impact the world.”
Baidu is also planning to launch competition for developers to build applications using its Ernie large language model (LLM) or integrate the model into their existing products, in a similar fashion other tech firms are using OpenAI’s ChatGPT technology.
Ernie bot is Baidu’s own AI-powered LLM that can generate natural and coherent texts based on user inputs.
“American developers are building new applications based on ChatGPT or other language models. In China, there will be an increasing number of developers building AI applications using Ernie as their foundation,” said Li.
Baidu unveiled the chatbot in March this year and claimed that it outperformed other LLMs in several benchmarks.
Battle for AI supremacy
The success of ChatGPT has put Chinese tech companies under pressure to fast-track the release of their own LLMs and bring them to market.
According to Reuters there are over 75 Chinese companies that have already released their own LLMs since 2020. Baidu and e-commerce giant Alibaba are among these companies.
A report by a state-run research firm says over 79 LLMs have been launched in the past 3 years.
And the Baidu boss predicts that in the generative AI age, Chinese companies will catch up, and even lead the way in discovering commercial applications for AI.
“I am very bullish on China AI development. Over the past few decades, China has warmly embraced new technologies,” said Li.
“Even though we didn’t invent Android, iOS or Windows, we developed a host of very innovative applications like WeChat, Douyin and Didi. Many of them are popular and useful. The same trend is playing out in the AI age. Technology ushers in a myriad of possibilities and we are good at capturing them to build applications,” explained Li.
LLMs, a vital tech
Since they can produce realistic and varied material across a range of subjects and forms, LLMs are seen as a vital technology for expanding AI applications and services. They do, however, also present ethical and legal difficulties, such as possible abuse, plagiarism, and bias. China released draft regulations on the use of generative AI in April in response to the spike in LLMs, requiring developers to acquire approval and explicitly label such products.
The growth and adoption of AI-based content production in China and elsewhere are anticipated to be accelerated by Baidu’s venture capital fund and competition.
Business
Metaverse Gaming Market Expected to Reach $119.2 Billion by 2028
The metaverse gaming market is estimated to encompass $22.7 billion in 2023 and projected to reach $119.2 billion by 2028, according to a recent report from ReportLinker.
The metaverse has been a hot cake in the tech industry in recent years and was boosted by Mark Zuckerberg’s decision to change Facebook’s name to Meta. However, the market has been limping towards AI, which stole the spotlight from virtual reality.
“The global metaverse in gaming market size is estimated at USD 22.7 billion in 2023 and is projected to reach USD 119.2 billion by 2028 at a Compound Annual Growth Rate (CAGR) of 39.3%,” stated the report.
The growth of the metaverse in the gaming market is expected to be fuelled by several significant factors, including the dynamic and evolving landscape of adjacent technology markets “such as extended reality (XR),” which encompasses “virtual reality (VR),” augmented reality (AR), and mixed reality (MR).
Expectation of rapid growth
In 2021, the gaming industry experienced rapid growth, with billions of people playing video games globally and generating over $193 billion in revenue.
Gaming companies quickly became early adopters in exploring the potential of the metaverse. Looking ahead to 2023, it was projected that the metaverse will continue to reshape the gaming landscape.
A survey from last year shows that about 52% of U.S. gamers believe the metaverse will change the game industry.
“According to the survey, just over half (52%) of gamers believe the metaverse will change the video game industry and a plurality (41%) think that the metaverse will have a positive impact on the industry (vs. 25% who disagree),” reads the survey report of Globant and polling firm YouGov.
Moreover, 40% say the buzz around “metaverse gaming is warranted,” though nearly “one-third (30%) were undecided” on that subject.
Who are the big players?
The metaverse is not just a single platform, virtual experience, or game; it is an entire world recreated to provide an immersive experience. Gaming is one of the many experiences in the metaverse that is powered by AI, VR, and AR.
Whenever it comes to gaming, some of the giant games like Fornite, Unreal, and Roblox come to mind.
Read Also: Meta Seeks to Boost Its Metaverse Gaming Credentials
And those are expected to be significant players in the metaverse due to their existing influence and capabilities in the gaming industry, as a report from 2022 states.
“As gaming platforms like Fortnight gain functionality and evolve into technologically advanced social meeting places, it becomes more likely that a functioning Metaverse, with an independent economy, systems, and processes is in our future,” reads the report.
Fortnite has transformed into a social meeting place, offering interactive events and branded experiences.
Unreal’s powerful engine enables immersive media experiences, while Roblox’s user-generated content and virtual currency have attracted millions of users. These factors position them to thrive in the evolving metaverse landscape.
Europe expecting significant growth
Europe is expected to witness significant growth in the gaming metaverse market, with the second-highest CAGR during the calculation period.
The UK, Germany, and France lead the way in technology investment, while Russia and Spain are also adopting new display technologies.
“The substantial growth of the virtual world immersive interactive gaming industry in Europe is a crucial driver for the gaming metaverse market in this region,” stated the report.
The immersive interactive gaming industry in Europe, along with the demand for AR, VR, and MR technologies in the entertainment sector, serves as a driving force, indicated ReportLinker.
@riseofaitech are now entering the Metaverse and the Play2Earn gaming space which, according to a 2021 Bloomberg report, is valued at $500bn with huge growth predictions. @sanboy23@Iamchike2@nainiydd#NFT #Crypto #P2E $AITECH pic.twitter.com/uMzyD2aSqL
— 오라클🔺 (@hoonjitw) June 1, 2023
Initiatives such as the European Association for Virtual Reality and Augmented Reality (EuroVR) and projects like Augmented Heritage and International Augmented Med (I AM) contribute to market growth.
With increasing startups in extended reality, particularly in Sweden, Europe is poised for increased growth in the gaming metaverse markets.
Business
Chinese City Pledges $1.42bn to Boost Metaverse Industry Growth
Chinese city Zhengzhou has announced a plan to boost the metaverse industry by providing a significant 10 billion yuan ($1.42 billion) fund for local companies’ growth and development.
Although the People’s Bank of China banned digital assets in September 2021, the Asian power centre seems liberal towards the metaverse.
Under the new government’s draft, metaverse companies relocating their headquarters to Zhengzhou will have the opportunity to grab a start-up capital investment of up to 200 million yuan ($28.34 million).
In addition, the municipal government will provide a promising opportunity for companies operating in the metaverse sector within the city.
Chinese city Zhengzhou has released a policy draft to support the development of the metaverse industry with a $1.42 billion fund, aiming for a thriving metaverse industry by 2025 pic.twitter.com/5dLGj1Rmp1
— 0xClaudia (@0xClaudiaCloud) May 29, 2023
For each project that receives certification as viable by the government, companies will have the chance to secure a substantial grant of 5 million yuan ($710,000), regardless of their headquarters location.
Moreover, the government is offering other benefits such as rent subsidies for the metaverse company within Zhengzhou.
Open for public to review
The draft is now available on the municipal government’s website for feedback and review by the public.
“The public is now open to solicit opinions, and all sectors of society are welcome to put forward their opinions and suggestions,” reads the translation.
Hence, the purposed plan is only a draft to date, and the government has not mentioned the specific date of the fund allocation.
The metaverse-related sectors in Zhengzhou are expected to generate annual revenues exceeding 200 billion yuan ($28.34 billion) by the end of 2025, according to the municipal government.
Amid speculation about China lifting an absolute ban on crypto, the public is taking this draft as positive news for the industry.
“More positive news for crypto from China, that’s great,” wrote a Redditor in reaction to the news.
“One positive thing after the other,” another agreed, hopeful of China’s liberal step towards the crypto industry.
Will China overtake the West?
Western industry leaders like Meta wanted to be the leaders in the metaverse, but are now pivoting towards AI. Whereas China appears to be positioning itself as a potential metaverse hub.
As part of its commitment to spearheading China’s digital advancement, Nanjing, the capital of Jiangsu province, has also launched the China Metaverse Technology and Application Innovation Platform.
Chinese cities are promoting the metaverse sector as the future of the digital economy.
— ICNN (@icnncryptonews) May 29, 2023
“The Metaverse is a vague concept and every [company] is interpreting it in its own way. In China, it’s very much a government-led concept,” said Brady Wang, an associate director at tech market research firm Counterpoint.
The Chinese government is clearly keen on the technology.
“The key difference [in the metaverse] between China and the rest of the world is it’d be heavily regulated in a centralized manner,” said Zhengyuan Bo, a partner at China-focused research firm Plenum.
Bo emphasised that the monetization of digital assets within the metaverse is constrained due to limited space for growth.
“I think in a decade or two, China will play a bigger role in everything than the US,” speculated one Redditor.
“America hates China because China doesn’t do what America wants it to. They hate it because it exists. I’m happy China is dedollarizing,” another Redditor expressed.
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